Experience Versus Innovation

Getting Up Early For Work
Nottingham University Business School

Nottingham University Business School

Nottingham University Business School specialises in developing leadership potential, encouraging innovation and enterprise, and developing a global outlook in its students, partners, and faculty. It is recognised as one of the world’s top business schools for integrating responsible and sustainable business issues into its undergraduate, MBA, MSc, PhD, and executive programmes and has unrivalled global reach through Nottingham’s campuses in the UK, China, and Malaysia. The School holds a Small Business Charter Award in recognition of its important role in supporting small and medium enterprises. It is accredited by both the Association of MBAs (AMBA) and the European Quality Improvement System (EQUIS) and ranks among the UK’s top ten for research power.
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Nottingham University Business School
Nottingham University Business School

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One reason why innovation is so often resisted within organisations is that it frequently comes from outside existing practice. When innovation is radical – that is, when its goal is to do things not just better but differently – opposition can be especially intense.

Many businesses are fiercely determined to avoid such upheaval. A standard response for some is to argue that experience has done them proud in the past and that it would be foolish to sacrifice every trace of instinct, intuition and expertise to accommodate some sort of seismic shake-up.

They may have a point. There’s a lot to be said for recognising what works and sticking with it, and novelty for its own sake is usually a recipe for disaster. But it’s also important to acknowledge that radical innovation can bring significant benefits and that knee-jerk distrust of substantive change may, therefore, be unwise in the long run.

So what about trying to achieve a happy medium that combines the two? Is it possible to accommodate experience and innovation and maybe even get the best out of both? Let’s consider some evidence.

Pop-Tarts and policing

Mounting pressure to cut costs in pretty much every industry has boosted the appeal of what we might call the prediction business. This is particularly manifest in the growth of just-in-time logistics – the art of delivering goods as and when they’re needed.

Big data plays a key role here. For instance, it’s by exploring a superabundance of historical information that US supermarkets know precisely which products their customers are most likely to snap up whenever a hurricane is a forecast.

Of course, some of this is the stuff of common sense. Bottled water and duct tape are among the more obvious choices when shopping ahead of a severe weather event. Yet perhaps only the wonders of algorithms could reveal with confidence that strawberry-flavoured Pop-Tarts are high on the average storm-hit American’s list of emergency provisions.

Much the same thinking lies behind predictive policing, which uses vast quantities of data to analyse patterns of criminal behaviour. In 2011, before “big data” even entered our everyday language, this cutting-edge crime-fighting method reportedly saved potential victims of burglary more than £1 million after being applied in Manchester’s Trafford district.

Defining intuition

The tension between the established and the emergent is obvious in policing. The former is encapsulated in old-fashioned instinct and intuition. The latter is encapsulated in novel technology and radical innovation.

In his 2011 book, Thinking, Fast and Slow, Nobel Prize winner Daniel Kahneman sought to reconcile these contrasting approaches in a broader setting. Along with Gary Klein, a fellow psychologist and author, he attempted to find some common ground between the die-hard and the disruptive.

Kahneman set out with a rather sceptical attitude towards intuition, having researched the poor performance of “expert” fund managers in financial markets. Klein brought a more positive view, having worked with firefighters and witnessed their decision-making skills in fast-moving situations.

The pair eventually concluded that intuition might be defined as a capacity to make decisions rapidly by recognising past instances. They also suggested that it should be trusted only after being gained in circumstances where the data set is large enough to be representative and the feedback loop is swift enough for lessons to be learned.

Striking a balance

This summary chimes very neatly with predictive policing, which has enjoyed a mix of triumphs and failures. Figures from the US indicate that recourse to data has helped in the battle against drug-dealing, assault and battery, gang violence and bike thefts but has had little or no impact in tackling crimes of passion and homicides.

How might this disparity be explained? Offences such as burglary are commonplace, so the data set is beyond a human’s processing ability but perfect grist to the alogrimithic mill. Offences such as murder are rare, so the data set is too small to generate a useful algorithm but sufficient for officers to draw on their hard-earned knowledge.

So it seems it is possible to have the best of both worlds. In fact, it’s not just possible: it’s desirable. We shouldn’t reject new and different ways of doing things, and we also shouldn’t expect them to render human judgment utterly redundant. Experience and innovation both have a place, and the two can even exist in harmony.

This blend can be seen in many sustainable organisations, which tend to be both stable and dynamic. They survive and thrive by keeping the essence of what has worked well previously and by always introducing unfamiliar elements. Amid the churn and challenges of modern-day business, striking this balance is increasingly vital to long-term success.

Paul Kirkham is a researcher in the field of entrepreneurial creativity with Nottingham University Business School’s Haydn Green Institute for Innovation and Entrepreneurship (HGIIE) and co-author of ‘Building an Entrepreneurial Organisation’.